U.S. Justice Department Sues Publishers

We’re taking a break from our relentless promotion of the Spring Conference (April 28, UNCG, register now!) to bring you some book-business news of import to writers:

Late last week, the U.S. Department of Justice “officially filed a civil suit in district court in New York against Apple and five of the six major publishers, charging they ‘conspired to raise retail prices of e-books’ by adopting agency pricing for e-books and applying it to all customers,” as reported by John Mutter of Shelf Awareness. The publishers named in the suit are Hachette, HarperCollins, Simon & Schuster, Macmillan, and Penguin; the first three are reaching a settlement with the DoJ while “indicating they don’t agree with the charges,” but Macmillan and Penguin have, so far, indicated they do not plan to settle.

“Agency Pricing,” in a nutshell, is the business practice wherein publishers fix the retail price of an e-book, and retailers are not allowed to apply their own discounts. The government is essentially arguing that the five publishers, plus Apple, colluded to in effect set prices by agreeing to adopt the agency-pricing model (Random House, the sixth major publisher, does not use agency pricing for e-books).

While agency pricing would seem to keep e-book prices artificially high and discourage competition, the named publishers (and the Authors Guild) have argued that it’s the only way to prevent a discounting war that would so benefit one particular retailer (cough, South American river, cough) that it would in fact eliminate competition altogether, and result in a less profitable and less diverse literary landscape.

All that is a gross over-simplification of what’s going on, so I urge all of you to follow the links I’m about to share. Some of the best reporting on the suit has been done by Mutter at Shelf Awareness and by Laura Hazard Owen at paidcontent.org; Owen has articles here and here that provide a comprehensive, nuts-and-bolts introduction to the lawsuit and the issues at stake.

Meanwhile, Jordan Weissman in the Atlantic and David Carr in the New York Times offer their takes on the lawsuit and its possible impact, with Carr saying that the suit is “the modern equivalent of taking on Standard Oil but breaking up Ed’s Gas ’N’ Groceries on Route 19 instead.”

The business of writing is changing fast, and anyone who claims to know how it will all turn out is fooling either themselves or you. Please make sure you’re staying as informed as you can, and keep writing.